New Climate Change Bill Lacks Critical RPS for Renewables

As stated in this source article, the various renewable energy industries such as solar are in desperate need of investor confidence and a guaranteed future market size to work towards, amidst a glut of oversupply at this time. A well-defined national RPS in the new climate change bill would lead to increased R&D into more cost-effective and efficient technologies and the formation of a complete domestic supply chain for renewables to support predictable future growth.

As noted in this source article, Senators John Kerry of Massachusetts and Barbara Boxer of California introduced a new bill last week entitled the “Clean Energy Jobs and American Power Act,” which is an edited version of the previous House legislation entitled the “American Clean Energy and Security Act” (ACES) or “Cap-and-Trade bill.” In addition, the Obama administration announced on the same day that it was moving forward on new rules to regulate greenhouse gas emissions (GHG) from hundreds of power plants and large industrial facilities. Thus, he has authorized the Environmental Protection Agency (EPA) to initiate regulation plans, which could prod lawmakers into reaching an agreement. Approved legislation would show substantial evidence that the U.S. is serious in dealing with global warming at the United Nations forum in Copenhagen in December, intended to produce an international agreement. The American Power Act calls for a 20 percent reduction of GHG emissions with respect to 2005 levels by 2020 and an 80 percent reduction by 2050. The bill is notably stricter on these emissions than the ACES bill, which was approved by the House in late June requiring a 17 percent reduction of GHG emissions by 2020. The centerpiece of the Senate bill is the cap and trade debate, which is now referred to as pollution reduction and investment (PRI). Under the PRI measure, limits would be set on the amount of GHG companies could legally emit. The “cap,” as it is commonly known, would set the upper limit of GHG that could be emitted into the atmosphere, while the “trade” would allow for companies to invest in pollution-reducing technologies or buy and sell credits to reach the cap. The full bill text and summary is available on Senator Kerry’s official website. 

The American Power Act also deals with renewable energy and energy efficiency; several major related sections are listed below:

 

1. Section 161. Renewable Energy. Directs EPA to establish a program to provide grants and other assistance to renewable energy projects in states with mandatory renewable portfolio standards.
2. Section 162. Advanced Biofuels. Directs EPA to establish a program to provide grants for research and development into advanced biofuels.
3. Section 163. Energy Efficiency in Building Codes. Requires the EPA Administrator to set a national goal for improvement in building energy efficiency.
4. Section 164. Retrofit for Energy and Environmental Performance. Establishes the Retrofit for Energy and Environmental Performance Program to provide allowances to States to conduct cost-effective building retrofits. 

 

Thus, the American Power Act or climate change bill lacks a critical national renewable portfolio standard (RPS) for the U.S. to achieve in comparison to the ACES bill RPS, mandating that investor-owned utilities buy 6 percent of their power from clean, renewables by 2012, gradually rising to 20 percent by 2020. However, there was a provision that 8 percent of the 2020 figure could be achieved through energy efficient technology. The way it would work is that utilities that did not comply would be required to pay a fee, but apparently the national fee was lower than the non-compliance fees charged by the 28 states with their own RPS in place. The solar and wind industry associations will likely advocate for the incorporation of a national RPS into the American Power Act, higher non-compliance fines than in the ACES bill, and more of the cap-and-trade pie to be shared with renewable energy companies, as opposed to credit exchanges between polluting fossil fuel companies and utilities.

 

Without a national RPS, states which do not have renewable energy mandates will be passed in the clean energy race and lose out on potential job creation amidst record-breaking state budget calamities nationwide, partly due to reduced sales, personal income and corporate tax revenues during the recession. In addition, it will create an imbalance in the distribution of renewable energy across the country, where there will be an abundance of solar, wind, geothermal, and biomass plants in a state with a mandated RPS bordered by a state without an RPS, hampered by new EPA and cap-and-trade GHG emissions regulations on its fossil fuel power plants. It may lead to a thriving new clean energy economy in a state with an enforced RPS, bordered by one that is unable to change the status quo and riddled with economic problems, leading to emigration of job-hunters and businesses across state lines. One way for a state to deal with that situation would be to approve a mandated RPS, as many states even with an RPS, simply have them as goals and benchmarks at this time. Furthermore, states with mandated RPS levels will be able to capitalize on the grants and other financial assistance offered in this legislation.

 

The various renewable energy industries such as solar are in desperate need of investor confidence and a guaranteed future market size to work towards, amidst a glut of oversupply at this time. A well-defined national RPS would lead to increased research and development into more cost-effective and efficient technologies and the formation of a complete domestic supply chain to support predictable future growth, as opposed to the industry’s volatile pattern of pursuing short-term subsidies such as feed-in tariffs and tax credits. Furthermore, states with fairly lax RPS regulations such as Arizona will see the cancellation or stalling of future solar energy projects such as Arizona Public Service's (APS) recent termination of the Starwood Solar I, a 290-megawatt concentrating solar plant (CSP), which was to be located in the Harquahala Valley, 75 miles west of Phoenix.

 

The delay in passing sweeping climate change and energy legislation has aided in prolonging the American recession, leading to nearly 10 percent unemployment, which is at a 26-year high, by stalling the development of a transformational clean energy economy and millions of green jobs. In the mean time, the Recovery Act has offered temporary relief for many industries through renewable energy and energy efficiency programs and the approval of many short-term infrastructure projects, but it has not generated enough confidence needed in the industry for substantial long-term growth, which would ultimately enhance the country’s gross domestic product and overall economy.

 

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